The creators of the world’s first social impact bond continue to believe these outcome-based financial products will eventually become marketable to institutional investors, even though they are yet to gain wide public appeal.

Social impact bonds aim to address future problems, promising returns to investors only if certain goals are achieved.

The first such investment was launched in the UK in 2010, when social investment advisory firm Social Finance and the Ministry of Justice raised £5m from 17 investors to fund rehabilitation services for short-sentence prisoners held at Peterborough prison.

Toby Eccles, founder of Social Finance, speaking last month at a roundtable on the subject hosted by City think tank The Centre for the Study of Financial Innovation, or CSFI, said: “In four to five years, I think these bonds will reach a greater scale than people expect, but it will have a slower start.

It requires a large group of stakeholders to hold hands and jump at the same time.”

Eccles described an evolution from philanthropic investments to larger-scale commitments. An example of what he means came in August, when Goldman Sachs announced plans to invest $9.6m in an antirecidivism programme for young people at a New York jail.

Fifty per cent of adolescents at this jail reoffend within a year of their release. If that rate drops 10%, Goldman will break even, and will turn a profit if the rate drops even further.

Bloomberg Philanthropies, a charity founded by Mayor Michael Bloomberg, made a $7.2m grant to the social services non-profit organisation assisting with the programme, to guarantee part of Goldman’s four-year loan.

The lack of a performance record is a hindrance to attracting institutional investors. It is still too early to measure even the first six-year UK project.

There is also an issue with the vast number of stakeholders involved in any one social cause. Eccles said: “These are not for the faint-hearted.”